Not all expenses are created equal. Spending $10,000 on server hosting is fundamentally different from spending $10,000 on a team retreat. To understand your business model, you need to separate your costs into the right buckets.

COGS (Cost of Goods Sold)

These are the costs directly tied to delivering your product. If you acquire one more customer, these costs go up.

• Hosting: AWS, Azure, Google Cloud.

• Support: Customer success salaries.

• Third-party Data: API calls required to run your app.

• Why it matters: This determines your Gross Margin. If your COGS are too high, you can't scale your way to profitability.

OPEX (Operating Expenses)

These are the costs to run the business, regardless of how many customers you have.

• R&D: Engineering salaries.

• S&M: Sales and Marketing.

• G&A: Rent, legal, finance, exec salaries.

One-Offs vs. Recurring

When analyzing burn rate, strip out the one-offs. Buying laptops for new hires is a "One-Off." paying for Slack is "Recurring." Your "True Burn Rate" should only include the recurring costs. If you mix them, you might panic over a high-spend month that was actually just a hardware purchase month.